RE:

The structure is as follows: Enron Market Claims Trading Corp. ("EMCT"), a=
Texas corporation and 100 percent subsidiary of Enron Global Markets LLC (=
"EGM"), organized Enron (Bermuda) Limited ("EBL"), a Bermuda corporation an=
d 100 percent subsidiary of EMCT, to serve as the Enron partner in Global R=
isk Strategies (Bermuda), Ltd. ("GRSBL"), a Bermuda organized entity that i=
s treated as a partnership for U.S. tax purposes and in which EBL possesses=
a 75 percent interest. Essentially, EGM through two entities (a U.S. enti=
ty and a Bermuda entity) has organized a Bermuda based partnership (that is=
, GRSBL) to engage in the claims trading activity. In turn, the consequenc=
e of Enron holding its interest in the Bermuda based claims trading busines=
s in this manner is that income derived from such claims trading business w=
ill not be currently taxed by the U.S. and, in fact, will never be taxed so=
long as the earnings from the activity are not repatriated from EBL to EMC=
T (i.e., from the Bermuda entity to the U.S. entity) - this will reduce EGM=
's effective tax rate because Bermuda does not tax this activity (we applie=
d for and obtained a tax exemption). Conversely, however, should GRSBL not=
earn income and instead generate a loss, such loss would not provide a U.S=
. tax deduction and this would operate to increase the EGM effective tax ra=
te (this is similar to the point discussed at the Monday meeting several we=
eks back related to EGM's Singapore business). Finally, in order to obtain=
the tax benefit mentioned above, it is important that transactions underta=
ken by GRSBL be executed outside of the U.S. (essentially, we will lose the=
tax benefit if GRSBL conducts business in the U.S.). However, transaction=
s that need (for nontax reasons) to be conducted in the U.S. can be underta=
ken by EMCT and (handled in this fashion) not taint GRSBL (since GRSBL is i=
nsulated from EMCT by EBL).

Accordingly, by organizing the claims trading business in the tiered subsid=
iary form described above, we have structured the business in a fashion tha=
t minimizes the tax consequences to EGM and this will, in turn, work to red=
uce the effective tax rate of EGM. I would be delighted to speak in detail=
regarding this should you have additional questions and can be reached at =
x30938 or on my cell phone at 713.817.5052. Best regards. SHD.

-----Original Message-----
From: =09Aronowitz, Alan =20
Sent:=09Thursday, September 06, 2001 12:32 PM
To:=09Shankman, Jeffrey A.
Cc:=09Douglas, Stephen H.
Subject:=09RE:=20

Jeff:

I will have Steve send you a note on this. Steve, please call me about this=
when you get back to the office later today.

Alan

-----Original Message-----
From: =09Shankman, Jeffrey A. =20
Sent:=09Thursday, September 06, 2001 11:12 AM
To:=09Aronowitz, Alan
Cc:=09Douglas, Stephen H.
Subject:=09RE:=20

What tax reasons? What is the structure? =20

-----Original Message-----
From: =09Aronowitz, Alan =20
Sent:=09Thursday, September 06, 2001 10:18 AM
To:=09Shankman, Jeffrey A.
Subject:=09RE:=20

Jeff:

I just tried to call you on this matter. I left you a voice mail.

This company was set up for tax reasons to indirectly hold 100% of the shar=
es of the new Bermudan company formed last week to trade insurance claims.

Let me know if you have any other questions.

Regards, Alan

-----Original Message-----
From: =09Shankman, Jeffrey A. =20
Sent:=09Thursday, September 06, 2001 9:32 AM
To:=09Aronowitz, Alan
Subject:=09

Alan, I didn't know we were setting up a sub of EGM for GRM. I've gotten a=
question from Whalley about it. Can you fill me in?

Jeff